DÜSSELDORF (dpa-AFX) - The real estate group LEG made a loss of billions in the second quarter. The bottom line was a minus of 1.1 billion euros due to a devaluation of the real estate portfolio, as the MDax group announced in Düsseldorf on Thursday. A year earlier, LEG Immobilien had reported a profit of 906 million euros. As previously announced, the company wrote down the value of its real estate portfolio by a good seven percent compared to the beginning of the year. The share price rose significantly in early trading.

Meanwhile, day-to-day business was much better due to strong demand for housing. Net rental income increased by 4.7 percent to 208 million euros in the three months to the end of June. Like-for-like rental income rose by 4.3 percent to 6.52 euros per square meter.

The key earnings indicator for the company, AFFO (cash flow from operating activities adjusted for capitalized investments), more than doubled to 63.7 million euros. The company confirmed its annual targets, which had only recently been raised due to one-off effects.

The share price recently rose by around 2.7 percent to 64.52 euros. Despite the current price gains, the share price has still fallen by almost 28 percent over the past year and, in line with the real estate sector as a whole, has been suffering for some time from interest rate hikes by central banks in the fight against high inflation. Since the record high in the summer of 2021 at around 139 euros, the value of the paper has shrunk to less than half.

Meanwhile, the real estate group is making progress with the planned sale of apartments. Despite the pronounced buying restraint in the residential real estate market, LEG sold almost 700 units on average at book value in the first half of the year, the company announced. LEG plans to sell a total of more than 5,000 apartments. This includes around 1,300 units from the Adler portfolio purchased in 2021. Like other companies in the sector, LEG intends to use the proceeds from the sales to reduce its debt.

Only recently, the real estate group LEG raised its targets for the full year. The company is now targeting an operating profit (AFFO) of 165 to 180 million euros. However, the brightening earnings outlook is also due to one-off effects caused by high interest rates: LEG has cancelled further new construction projects. Rising interest rates are making the financing of residential projects more expensive. In addition, the sector is suffering from rapid cost growth and bottlenecks in materials and craftsmen. Many real estate companies are therefore postponing plans for new buildings or disposing of residential portfolios.

In addition, according to the Group, another factor is having a positive impact on the earnings outlook for the year: For example, the excess profit tax on LEG's own electricity production is lower than expected. On the other hand, the demand situation in the real estate sector, which is also tight, is an advantage for LEG. The company expects rental growth of 3.8 to 4.0 percent. However, LEG does not intend to invest more money in its portfolio. The investment forecast remains at 35 euros per square meter./mne/men/jha/